18 February 2016

John Barton

Director & CEO

I recently saw an old headline that caught my attention and got me thinking…

“Dallas Cowboys owner Jerry Jones explains how his flip phone got him his $1.2 billion stadium.”

Now, I’d never heard of Jerry Jones  – and you probably haven’t either. Jerry is a billionaire. He owns a football team (the Dallas Cowboys) and the stadium in which they play (AT&T Stadium). He also uses a rather old (some would say quaint) flip phone  -  the kind that was all the rage before any of us had ever heard of iPhone or Samsung Galaxy.

Now Jerry can clearly afford whatever phone he wants, and there are some practical features offered by his old model  –  no pocket-dialling and the increased privacy due to the lack of geo-location. He probably also has an assistant or two who perform some of the tasks that us non-billionaires may now have performed by smart-phone Apps. But Jerry made another more insightful comment. He said, “It’s how you have a stadium worth $US1.2 [billion] if you watch your pennies and use flip phones. You can’t have it all.”

He’s right. Particularly those last five words  –  ‘you can’t have it all’. And let’s face it, if a billionaire can’t have it all  –  neither can we. Every dollar we ever earn, regardless of how many we earn along the way, can only be spent once. Once it’s gone  -  it’s gone.

This got me thinking about stickiness  –  and the obvious observation that a common trait for many wealthy, financially independent people is their stickiness. They hold onto a lot of the dollars that they earn.

So, how sticky are you? How many of the dollars that you earn this week, this month or this year will you still have next year or the year after? Would your chances of building the best possible future for yourself (and your family) be improved if you could increase your stickiness? Of course it would.

Get into the habit of thinking about stickiness. Value every dollar in, and consider the balance of your spending along the way. Ensure that you aren’t just letting your hard-earned dollars slip through your fingers.

For the vast majority of Australians, regardless of their earnings, the challenge isn’t earning enough. The challenge is holding onto enough of those earned dollars and putting them to work for us. Whilst earning more can obviously be of assistance (and is highly recommended as a wealth creation strategy), we all know people who spend every dollar of every pay rise. This pattern holds their wealth at or near nil, whilst their lifestyle continues to improve. The risk of this approach is that one day the merry-go-round stops and the lifestyle has nowhere to go but down.

Does this mean we should all become Scrooge  –  saying ‘bah humbug’ about every opportunity to enjoy our lives that comes along? Clearly not. Effective financial planning balances our needs for today and for tomorrow and ensures that we can enjoy a comfortable lifestyle, within our means today, whilst at the same time ensuring that future needs are catered for.

All too often I hear the refrain “I earn plenty, but at the end of the year, I just don’t seem to have much to show for it. I just don’t know where it all goes.”

When it comes to spending, particularly on those less important things we all find ourselves buying from time-to-time, think sticky. You’ll be glad you did!

Disclaimer: This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.